Mega bank merger announcement: Govt to amalgamate 10 public sector banks into four large entities

The Central government on Friday amalgamated 10 public sector banks (PSBs) into four entities

Big banks enhanced capacity to increase credit, Finance Minister Nirmala Sitharaman said at the start of the press conference

After the amalgamation, only 12 PSBs will be left in India from the 27 earlier

After the announcement of the foreign direct investment, in a major reform measure, the Central government on Friday amalgamated 10 public sector banks (PSBs) into four entities, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks. Big banks enhanced capacity to increase credit, Finance Minister Nirmala Sitharaman said at the start of the press conference before announcement of the new bank mergers.

In place of fragmented lending capacity with 27 PSBs in 2017, now there will be only 12 state-run banks post-consolidation, Sitharaman said.

The finance minister also said banks will be provided adequate capital.

Canara Bank to be merged with Syndicate Bank to create 4th largest public sector bank with Rs 15.20 lakh crore business.

While Indian Overseas Bank will get Rs 3,800 crore, Central Bank of India will get Rs 3,300 crore and UCO Bank Rs 2,100 crore.

United Bank of India will get approximately Rs 1,600 crore and Punjab and Sind Bank Rs 750 crore. Together these banks will get approximately Rs 55,250 crore.

Capital infusion for PSBs

Last week, Sitharaman had announced that the Rs 70,000 crore capital infusion for PSBs for the current fiscal would be front-loaded.

Financial Services Secretary Rajiv Kumar, who was also present at the press conference, said there was no retrenchment in the past consolidations, including of SBI, and service conditions of employees improved.

"Employees will only benefit with the mergers," he added.

Earlier this year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.

Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sind Bank will continue to function as earlier as they have strong "regional focus", Sitharaman added.